A trade war between Canada and the U.S. was temporarily avoided this week, but the mortgage market reacted immediately, with fixed mortgage rates hitting their lowest levels in over two years. If you’re in the market for a new mortgage or refinancing your current one, now is the time to pay attention.
Why Fixed Mortgage Rates Are Dropping
Stock markets took a hit on Monday as investors grew concerned about a potential trade war. In response, many moved their money into safe-haven investments, like bonds. This caused bond prices to rise and bond yields to fall—which directly influences fixed mortgage rates. As a result, Canada’s five-year bond yield dropped significantly, pushing down fixed mortgage rates.
Lenders responded quickly. By Tuesday, the lowest five-year fixed mortgage rate in Canada had dropped to 3.89%—the lowest since summer 2022. This is one of the rare times borrowers have seen five-year fixed rates starting with a three.
How Long Will Fixed Mortgage Rates Stay This Low?
While Monday’s market turmoil was short-lived, uncertainty remains. Both stock and bond markets stabilized after news of a 30-day tariff delay for Mexico and Canada. By the end of the day, the five-year bond yield recovered slightly but remained low, helping fixed mortgage rates stay attractive.
Even with some stabilization, investors remain cautious. The five-year bond yield is still well below its January peak, meaning mortgage rates could stay lower for a while. However, economic reports—like employment numbers from Canada and the U.S.—could cause sudden fluctuations.
What Should Homebuyers and Homeowners Do Now?
If you’re looking to buy a home or refinance, now is the time to lock in a fixed mortgage rate before they rise again. A mortgage preapproval ensures you secure today’s low rates for up to 120 days, protecting you from future increases.
Additionally, while variable mortgage rates are expected to drop as well, they come with more risk. The Bank of Canada could lower rates further in response to economic uncertainty, but if inflation spikes, rates could rise again.
Take Action Today
Don’t miss out on this opportunity to secure a low fixed mortgage rate. Speak with a financial planner to assess your options and make the best decision for your long-term financial health.
Book an Appointment with a Financial Planner
Navigating mortgage rates and financial decisions can be overwhelming. Book a consultation today to discuss how these changes impact your financial goals.
Learn More About Retirement Planning
For a deeper understanding of how mortgage rates, investments, and financial planning fit into your retirement strategy, check out The Art of Retirement. This book will guide you through smart financial decisions to secure your future.
